Corn feed use is a wild card. High feed costs have caused livestock producers to curb production. Cattle feedlot placements were down sharply through the fall with cattle on feed as of Jan. 1 expected down 5 percent to 7 percent. Broiler placements were down about 4 percent through the fall and down 2 percent cumulatively for 2012. Hog farrowing intentions for Sept-Nov were down 2.7 percent, pointing to fewer hogs next spring. However, rising hog prices may have caused producers to rethink their intentions. Feed and residual use is forecast at 4.1 billion bushels, down 10 percent from last season. This is a large cut, particularly in the face of reduced dried distillers grain production.
Feed use will be lower, but it’s not clear that rationing will occur at the needed pace. Quarterly grain stocks are used to estimate feed use. Stock estimates over the past few years have been noted for their large deviations from expectations. Given historically tight supplies and uncertain demand, the stage is set for volatile markets in response to the stocks reports.
We expect nearby futures to hold above $7 through the winter, but also have difficulty pushing above $8. Looming dryness this spring will be supportive, but, with timely planting and rainfall, prices become increasingly vulnerable to the downside through the spring and summer. With normal yields, December 2013 futures have downside risk to $4.50 by the fall.
Marty Foreman is a senior economist at Doane Advisory Services.
Soybean Outlook: Planting projected higher
By Bill Nelson
Soybean and meal prices vaulted to records in 2012, and they will begin 2013 at high values that reflect tight supplies and the uncertainties posed by the main growing season for South American production. Following three consecutive disappointing global crops — 2011 in the U.S. and 2012 in both South America and the U.S. — world soybean consumers are in desperate need for a big soybean crop harvest this spring.
The crux of how 2013 prices play out is hugely dependent on the success or failure of the South American crop harvest that occurs largely between February and April. High prices encouraged record plantings in Argentina, Brazil, and Paraguay. Planting weather was challenging in both Argentina and Brazil, resulting in later-than-normal plantings. There is still much weather ahead now in early 2013 to determine the outcome of South American production.
Global soybean markets will pay much attention to the weather forecast maps during February, probably the most important month in determining the final outcome for those crops.